OIL SANDS:

Utah panel clears the way for nation's first commercial-scale mine

Scott Streater, E&E reporter

EnergyWire: Thursday, October 25, 2012

A Utah water quality panel whose members are appointed by the governor voted yesterday to uphold a state permit that could pave the way for the nation's first commercial-scale oil sands mine to be built in the picturesque Book Cliffs region of eastern Utah.

The Utah Water Quality Board's 9-2 vote means Calgary, Alberta-based U.S. Oil Sands Inc. can move forward with its PR Springs oil sands mine, which the company has said could begin producing roughly 2,000 barrels of oil per day by the end of next year.

The state board's vote upholds a decision by an administrative law judge in August that supported last year's decision by Walt Baker, director of the state Division of Water Quality, to approve the project without requiring U.S. Oil Sands to first obtain a groundwater-pollution permit that would require additional environmental studies.

The Utah Board of Oil, Gas and Mining is expected to vote at its meeting in December to issue a permit authorizing construction to begin on the first phase of the mine on 213 acres in the Uinta Basin north of Arches National Park.

In voting to uphold the permit, the water quality board rejected arguments by Moab, Utah-based environmental group Living Rivers that the mine would endanger groundwater in the region. The group also contends the mine's proposed process to separate bitumen petroleum from the sand using a citrus-based solvent will spread toxic chemicals and other pollutants, and that the state needs to be very careful about the first oil sands mine.

"What we're asking for is a more rigorous oversight of this mine," said Rob Dubuc, a staff attorney in Western Resource Advocates' Salt Lake City office who is representing Living Rivers. "This is the first of its kind. We should be conservative in how we approach this."

The company and state regulators say that they have dug wells and made numerous efforts to find groundwater, as defined by state law, but that they have not been able to find any near the surface that could be affected by the oil sands mine.

"This case turns on the burden of proof," said Christopher Hogle, a Salt Lake City-based attorney who is representing U.S. Oil Sands. "They didn't satisfy their burden of proof. This is a good project, and it's been in the permitting process since 2005. We're not blaming the agency, they've done a good job, but [the company] wants to get started. It's a good project, and they want to get started."

Dubuc said Living Rivers plans to appeal yesterday's water quality board decision to the state court of appeals.

"We're not quite done yet," he said after the two-hour hearing that included 15-minute arguments from Dubuc, Hogle and Paul McConkie, an assistant attorney general representing the Utah Division of Water Quality.

Several members of the water quality board asked some pointed questions of Hogle and McConkie about the potential presence of groundwater in the arid region and how best to protect it.

U.S. Oil Sands, previously known as Earth Energy Resources, has been operating in Utah for seven years, and the company's PR Springs lease is part of a 6,000-acre region that company documents indicate could contain nearly 190 million barrels of bitumen (EnergyWire, April 26).

Darrell Mensel, a water quality board member, asked Hogle during the hearing how anyone could be certain that the PR Springs mine and the other mines likely to follow would not affect the hydrology of the area.

"I don't see how you can say this is all down the road and something we can just look away from," Mensel said.

A contentious issue

The issue of groundwater at the proposed mine site, and whether there is any groundwater in the area that needs to be protected, has been the focal point of Living Rivers' objection to the proposed mine.

U.S. Oil Sands plans to extract petrochemicals from the oil sands using a citrus-based solvent and hot water, both of which would be partially recycled. In the first phase of the project, the firm expects to produce 2,000 barrels of oil each day.

Dubuc argued on behalf of Living Rivers at yesterday's hearing that the company and state regulators have ignored evidence that groundwater is seasonally present at the proposed mine site, and that allowing mining in the region without first obtaining a groundwater permit would violate state environmental law, which he said mandates that all groundwater must be protected.

At an administrative law judge hearing last spring that formed the basis for Judge Sandra Allen's decision in August upholding the state's permit decision, the issue of groundwater in the region was a key topic of debate (EnergyWire, May 17).

Robert Herbert, groundwater protection manager at the state Division of Water Quality, said the company drilled several wells at the site before hitting water 1,800 feet below ground level. Herbert argued at the May hearing that the dense rock formation in the region would make it impossible for any pollutants from the oil sands operation to migrate to such an extreme depth.

However, under questioning, another state regulator at the May hearing said the site might contain more surface-level groundwater than the state's assessment suggests. "I never meant to deny there is groundwater at this site," said Mark Novak, an environmental scientist at the Division of Water Quality.

Still, Allen in August concluded, "Substantial evidence in the record supports a finding that shallow groundwater has not been located and may be assumed absent in the project area."

The testimonies of Novak and Herbert were major components of Dubuc's presentation before the water quality board yesterday.

"There really is no question that there's shallow groundwater at the mine site," Dubuc said at the hearing.

McConkie, the Utah assistant attorney general, said yesterday that the state "can't rule out that at some time in the future groundwater might show up at the site," but that there's no evidence it's there now. And if groundwater is later found, the water will be analyzed and a groundwater permit might be required.

Hogle said U.S. Oil Sands "wants to be a good partner" with the state. "They'll do whatever is required or asked of them," he said.

But he added that there's no evidence of shallow groundwater at the site.